Denis MacShane: The Foreign Secretary cannot be faulted in the handling of this crisis and, if I may say so, his Minister of State, the hon. Member for Taunton Deane (Mr Browne), was very impressive on the BBC yesterday. However, before we go down the road of arming the opposition, should we not recall what happened when the west armed the mujaheddin and they turned into the Taliban and al-Qaeda? More broadly, this is the fourth major intervention in a majority Muslim country—and Iraq, Afghanistan and Libya are not happy examples to follow. Do we not need a broader strategic approach to this region of crisis?

Stephen Barclay: It is a pleasure to follow the hon. Member for Glasgow North East (Mr Bain). I pay tribute to my hon. Friend the Financial Secretary to the Treasury for what is a very good Bill. It displays the diligence and expertise that he brings to his ministerial duties.
	I am sure that the Financial Secretary would be quick to recognise—and here I have some sympathy with the line pursued by the right hon. Member for Morley and Outwood (Ed Balls)—that no regulatory structure is a panacea for regulatory risk. We saw that with the Bank of Credit and Commerce International and the Bank of England. The Bill does not address the core lesson from the recent regulatory failure, which is the failure of capital and liquidity rules. In essence, what we are debating is the supervisory arm of an EU regulatory policy agenda. Fortunately, my hon. Friend the Member for Stone (Mr Cash) is not in his place or he would be intervening at this point.
	For all the strengths of the Bill, I will touch on three areas where I fear the expectations of our constituents may be raised, but where the regulator may not have the power to meet them. The first is the extent to which the financial conduct authority will have an interventionist approach and its objective of promoting competition. The second is its ability to achieve speedy resolution, which was addressed briefly by my hon. Friend the Member for Cities of London and Westminster (Mark Field). The third is whether it will achieve effective enforcement against individuals and whether there should be strict liability. Indeed, my hon. Friend the Member for West Suffolk (Matthew Hancock) touched on whether
	there should be criminal sanctions, a point that was floated in Lord Turner’s RBS report but not answered. If time allows, I also wish to put forward a proposal on which there may cross-party consensus about how fines imposed when there is a regulatory breach are redressed and what is done with the funds.
	I would be grateful if my hon. Friend the Financial Secretary addressed the risk-tolerance of the new consumer regulator. There has often been a misconception that regulators are about ensuring zero failure, and I would welcome some sense of the point at which the new regulator will be judged as having failed to intervene, and what size and scale of failure in the regime is tolerable.
	On the competition objective, some Members have referred to the lack of a power for matters to be referred directly to the Competition Commission. They have to be referred via the Office of Fair Trading. There is potential for two regulators to have different interpretations, and therefore for duplication of costs and confusion about where the power of one regulator ends and that of another starts.
	My hon. Friend the Member for Cities of London and Westminster touched on the need for speedy resolution. To take the example of payment protection insurance, a firm can appeal to the regulator and seek a 90-day review, and then it can have the decision judicially reviewed, which can stretch things out for about a further 18 months. A firm can stretch out proceedings in a mis-selling case for tactical reasons, so that it can use the funds in question in the short term. The thoughts of my hon. Friend the Financial Secretary on that would be welcome.
	The key issue, which always arises in my constituency, is the sense of grievance that there has not been enforcement action against individuals. That was at the heart of the Treasury Committee’s reason for requiring a report from Lord Turner, but nothing in the Bill really addresses the issue. It does not say whether there will be strict liability, and there are no proposals to frame criminal sanctions. For what it is worth, I believe they would be very difficult to frame.
	Within banks, the real problem is that senior executives protect themselves through complex management structures, such as by devolving control functions lower down the organisation so that there is a buffer between them and the decision making and they are knowingly blind. Risk functions are often poured into financial ones, meaning that there is a potential conflict of interest, and compliance officers often get to shape meetings with supervisors, notwithstanding the more intensive regime that the regulator is currently following.
	A key issue that we need to address either in this Bill or in future legislation is how individuals at the top of banks are held accountable when there are mistakes. My hon. Friend the Financial Secretary might need to have discussions with the Lord Chancellor about that, because judicial review and the risk appetite of the tribunal need to be addressed. Given their judicial nature, those points fall within the Lord Chancellor’s responsibility. They go to the heart of whether people get a sense of justice being done when there are serious failures.
	I move on to a matter on which I would welcome comments from both Front Benchers in the winding-up speeches, and on which there could be scope for positive reform. That is what happens when a firm pays a regulatory fine. It may surprise Members that currently,
	under paragraph 16 of schedule 1 to the Financial Services and Markets Act 2000, when there is a fine for a regulatory breach the money does not go to good causes, or even to the Treasury—my hon. Friend the Financial Secretary might think that the Treasury is a good cause in itself. It goes towards reducing the levy paid by other financial firms. When a bank breaks the rules, it reduces the levy for other banks. Over the past two years, such money has amounted to £166 million. I know that a number of Members are keen on financial education—the all-party group on the subject is the biggest in the House. Perhaps such a fund could be hypothecated for use in a more constructive way, and I would welcome comments on that in the winding-up speeches. I recognise that firms are contributing more to financial education now, but it is odd that they benefit from the regulatory breaches of other firms.
	I shall conclude, because I am aware of the time limit and want to allow time for others to contribute. The Bill is a good one, but as I said at the beginning of my speech, there will be failure. When there is, an independent report is the most reasonable of expectations. It is instructive that Lord Turner is not a neutral player. Will the Minister clarify how much his report cost to compile? I would like scope in the Bill for an independent report in future if we are in the unfortunate position of having a further regulatory failure. That the Treasury Committee had to seek private experts so that it could comment on Lord Turner’s report speaks volumes. That small matter could be tightened up in Committee.
	Overall, this is an excellent set of measures, and I will have great pleasure in supporting my right hon. Friend the Chancellor in the Lobby this evening.